SIPP Provider, Gaudi Regulated Services Limited (Gaudi), was recently ordered to pay compensation to a client who invested a huge amount of his pension into the St Lucia property developer Affinity Global Developments via Bonds.

Dante Partners LLP was engaged by St Lucia property developer Affinity Global Developments to promote its bonds. Documents had been approved by Dante Partners LLP on behalf of its Appointed Representative, IPO Capital Partners Limited, who acted for Affinity Global Developments plc.

St Lucia Property Investment

Affinity Global Developments plc was incorporated in 2014 in the UK. In 2014, it issued bonds to be listed on the GXG Main Quote Market in Denmark. The bonds had a five-year term paying a return of 8%-12% over the term of the bond.

At the time, Beaufort Securities was a wealth management and stockbroking firm, offering a range of services to its clients, including advisory stockbroking, online share dealing, foreign exchange trading and discretionary fund management services.

As part of the application process for the SIPP’s, Gaudi agreed to open a share dealing account with Beaufort. You may recall that Beaufort has been fined twice by the FCA, in 2003 and 2006, for various breaches of the FCA’s Principles before it went into special administration in 2018.

The client agreed to authorise an agent to give instructions in respect of the account.

The Financial Ombudsman decision confirmed that in this case, the agent was also a director of Affinity Global Developments plc, who also gave his address as the registered address of that company.

The client transferred almost £700,000 to Beaufort Securities. The director instructed Beaufort to make the investment into the Affinity Global Developments bonds.

Unsuitable Investment Advice

Whilst Gaudi said it had carried out due diligence on the Affinity investment, it said the investment memorandum was approved by a regulated firm for promotion to retail clients. It required “any sales to be fully advised or promoted by a regulated entity, as they were in this instance, as Dante was noted … as the regulated introducer with full permissions to promote the investment.”

You may not know this, but there is a difference between promoting an investment and recommending the suitability of an investment to clients.

Being suitable for promotion to retail clients doesn’t mean that an investment should be regarded as suitable for every client.

As Gaudi were aware that Dante Partners was promoting the investment on behalf of the issuers it was clear that the client had not received ‘’independent’’ or impartial financial advice!

The Ombudsman explained that Gaudi should have been concerned about the role being played by those who had an interest in the investment. It should also have had some concerns about the poor record of Beaufort and about its involvement in the arrangement.

Gaudi should have been concerned about the size of the investment and the large proportion of the pension being invested in one investment – the high degree of concentration risk.

There were warning signs that there was a real risk of detriment here – that the client was at risk of suffering real and serious harm through not getting independent advice.

Get Your Transactions Reviewed

It doesn’t matter if you used Gaudi or any other SIPP provider, if this is your story you should get the transaction reviewed, especially if your investments with the SIPP were made via Discretionary Fund Managers (DFM) such as SVS SecuritiesBeaufort SecuritiesReyker SecuritiesStrand Capital or Organic Investment Management.

Those firms arranged subsequent investments via bonds, loan notes or debentures such as;

  • Affinity Bond
  • Audley Funding PLC (known for issuing loan notes in Angelfish , Corporate Bonds & The Resort Group / TRG Loan  notes)
  • Blackmore Bond
  • Church House Investment Limited
  • Escher Marwick PLC (also known for issuing The Resort Group loan notes)
  • Falcon Investment SICAV PLC (Malta)
  • Hummingbird Resources
  • Just Loan Debentures
  • Via Capital Loan Note

You may find that these investments were unregulated collective investment schemes based overseas and unlikely to be suitable for retail clients.

You may have also received statements showing that your pension had been performing very well, when in fact the investments may be illiquid – meaning you could not get access to your own money!

Get Claims Advice

You are eligible to take advantage of our pension consulting service, offering independent claims advice. Please contact us now, as time barring restrictions may apply.

Call our compensation experts for a no obligation chat to explore your options and get a deeper understanding of how we work before deciding on what’s best for you.

And if you have been cold called and have come across our website looking for a better deal, you are on the right track. We offer to carry out the work for a reasonable fee as we don’t buy data from the companies involved and pay them in return!

Why don’t you call us on 0333 358 0074 for an informal chat?